Quirky fashion designer Thom Browne whose men’s suits are famous for their super-short “flood” pants is scrambling to keep his business from sinking underwater, The Post has learned.
Having spent lavishly on expensive tailors and over-the-top fashion shows, Browne has watched the Wall Street crisis kill demand for his tight, geeky “Pee-wee Herman” outfits, which last year carried price tags upward of $5,000 each.
While upscale stores like Barneys and Bergdorf Goodman slash markups and cancel orders this spring, Browne has racked up so much debt that he’s now in danger of losing control of his own company, sources told The Post.
“He’s in a real squeeze,” said one source close to the situation. “If he can’t wriggle out of it in the next couple of weeks, he’s facing a potential bankruptcy.”
Browne is in a bind despite a growing reputation as one of the most influential men’s designers in the world. While his clothing isn’t mainstream fare, Browne is widely credited for the shorter jackets and slimmer lapels that have become popular in recent seasons.
Browne also has cut lucrative licensing deals with Harry Winston, Moncler and most significantly, a multimillion-dollar design deal with Brooks Brothers that extends to 2011.
Still, luxury spending is in a nosedive, threatening high-priced designers across the industry. Browne is in talks with “a number of potential suitors,” according to one source close to the designer. But “in this climate, no one is going to invest equity in that business,” another source said.
As an alternative, Browne is looking to negotiate debt-based financing that would enable him to settle with creditors and prop up his still-tiny company, which netted about $5 million in sales last year, according to industry sources.
In one potential deal under discussion in recent weeks, Thom Browne would sell a 60 percent stake in itself in exchange for a $3 million investment from Individualized Apparel Group, the New York-based owner of the Oxxford men’s suiting line.
But a deal with IAG which last year began manufacturing Thom Browne’s famously rumpled shirts, skinny ties and shrunken suits “isn’t happening” at the moment as Browne searches for a better deal, according to one source.
When and if an agreement is reached to avert bankruptcy, “it’s going to have hugely draconian terms attached to it,” according to one source.
As Browne has searched fruitlessly for a financial partner for more than a year, one stumbling block has been his oddball fashions, according to one industry source.
“There’s a concern about the long-term potential of the brand,” the source said. “People are just worried that it’s a fad.” james.covert@nypost.com